Muslims 'absolutely critical' to fight against terror

Australia's domestic spy chief says ASIO's ties with Muslim communities in Australia are "absolutely critical" to the fight against terrorism.

Duncan Lewis, director-general of ASIO, would not comment directly on One Nation leader Pauline Hanson's burqa stunt in the Senate on Thursday, but said relationships with Australian Muslim communities were central to the work of intelligence and law enforcement agencies.

"We have very good ties with Muslim leaders across the country and those ties, the association we have with the broader Muslim community, is central to our business," Mr Lewis said on Friday.

Speaking after the terror attack in Barcelona, which left more than a dozen dead and dozens injured, Mr Lewis said authorities expected "an overflow" of extremist elements coming to the west, as the so-called Islamic State lost ground in the Middle East.

ASIO director general Duncan Lewis at Parliament House on Friday. Photo: Andrew Meares

"Some of those will try to go to western Europe. Some will try to go to other places," he said.

"We would expect there would be a small trickle back here to Australia. So we're very alert to that and as you know, there are frameworks in place here in this country to ensure that we are properly poised and ready to address that issue as it arises."

On Thursday afternoon, Senator Hanson shocked fellow parliamentarians by entering the chamber in a black burqa before raising security concerns about the religious garment.

He noted most victims of Islamist terrorism were Muslims and said an "overwhelming majority" rejected terrorism as much anyone else.

"Mutual respect is not just the foundation of our success as a multicultural society, it's the foundation of our national security," he said.

"Because that enables us to live together, work together, in harmony and from Duncan's point of view - obviously, from an intelligence-gathering point of view - good relations with the Muslim community."

The Prime Minister said Senator Brandis "spoke with eloquence and with wisdom" in his speech, which received a standing ovation from Labor and the Greens.